The present disclosure relates to the field of managing inventory in a store, and specifically to managing inventory in a store that handles both in-store purchases and on-line purchases. Still more specifically, the present invention relates to dynamically adjusting safety stock levels of inventory.
Physical “brick and mortar” stores often offer multiple selling channels to customers. That is, customers can come into the store to purchase an item off the shelf (i.e., an “in-store” purchase). Alternatively, customers can access a website for the store (i.e., go “on-line”), purchase the item, and then come into the physical store to pick the item up from “will call”. Alternatively, customers can access the web site for the store, purchase the item, and then have the item delivered to their location.
In order to support these multiple selling channels, the store's physical inventory of items is exposed to both in-store and on-line shoppers. Due to the divergent channels, retailers keep a portion of store inventory set aside as safety stock, in order to avoid overselling the items. That is, an in-store shopper may have an item in his/her shopping cart, but has not yet checked out and paid for the item at a point of sale (POS) station (e.g., an intelligent cash register). Thus, the store's inventory computer will assume that the item is still available to on-line shoppers, although this is not the case (since the item is in the in-store shopper's cart). This issue is especially problematic for high-value items, such as jewelry, cameras, etc., which are typically kept in the store in low quantities (in order to reduce the amount of capital being tied up in inventory).
Thus, stores will keep a “safety stock” of each item. A “safety stock” is a buffer of available inventory. For example, an inventory system (computer) may show that there are three particular cameras (i.e., from the same manufacturer and of the same model) in stock. However, the inventory system will assume that at any point in time, one of those cameras is in an in-store shopper's cart, is lost, has been shoplifted, etc. (whether this is actually the case or not). Thus, the inventory system will establish this one camera as “safety stock” to handle these situations (i.e., the camera is in a cart but not purchased, the camera has been lost/stolen, etc.), leaving only two cameras in “inventory”.
If the store is too cautious (e.g., keeps two of the three cameras held back as safety stock, such that only one camera is available for purchase), then the store has less inventory to offer for sale. If the store is not cautious enough (e.g., keeps no cameras held back as safety stock), then the store may oversell the item (i.e., promises to sell three cameras on-line even though one of the three cameras was in the in-store shopper's basket when the on-line orders came in).